Policy: Labor

Christine Lagarde: US economy weaker than what official unemployment rate shows

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Beltway Confidential,Opinion,Joel Gehrke,Jobs,Labor,Entitlements,Economy,Unemployment

International observers of the U.S. economy care more about the fact that so few people are in the job market than the fact that the official unemployment rate is, technically, dropping.

"Unemployment will continue to go down," International Monetary Fund managing director Christine Lagarde said in an interview recorded for "Meet the Press." NBC released excerpts of the interview ahead of the Sunday airing.

"Most importantly, what we need to see is a higher participation rate," she continued. "Participation means the number of people who actually join the job market and get a job. That number has not moved up significantly, and that's the one we will be looking at. Are people getting jobs, rather than, are people receiving unemployment benefits and registering as unemployed."

To Lagarde's point, the participation rate -- the number of Americans employed or actively looking for a job -- hit a 35-year low in October, according to figures released by the Labor Department in November. In November, the unemployment rate dropped from 7.3 percent to 7 percent, even though the participation rate "changed little" according to the Bureau of Labor Statistics.

In November, there were 91,273,000 people who did not have jobs but did not count as unemployed, for purposes of the official unemployment rate, according to BLS.

Still, Lagarde allowed that the economy has improved since the worst of the recession. "I would observe that the economy has picked up," she told NBC's David Gregory. "We forecast further pick up in 2014. Second, most people who invest, who hire, will tell you that they're uncertain. They were uncertain because seeing a budget deal, seeing tapering by the Fed, which is a sign of confidence in the real economy, should lead them to invest, to hire and to be more confident into the future of the U.S. economy."

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